18 minute read
BREAKBULK EUROPE REGIONAL REVIEW
Hapag-Lloyd is considering investment in additional specialist project cargo equipment.
CREDIT: HAPAG-LLOYD
director, niche products, meanwhile, said that any impact of specific infrastructure projects announced in Europe had yet to be seen in terms of higher demand for moving breakbulk and project cargo.
“A lot of things would be built in China/Asia and at present we just have our regular flows where parts can be loaded on container ships, but we don’t really see anything on top of that. As far as bigger parts are concerned, it is business as usual for now.”
She said a timeframe of two to three years would be expected from initial announcements, to allow for tendering and ordering, before cargoes start moving, but noted that Hapag-Lloyd was seeing an increase in requests from sectors such as oil and gas, wind power and mining.
“In general we are optimistic, and if the market continues to be strong, Hapag-Lloyd would be willing to continue to invest in additional equipment,” she said. The wind turbine sector is definitely one where the line is involved, she added.
AAL Europe deals with a number of green energy projects around the world, with these being controlled out of Europe, Muentz said. “Therefore, the European multipurpose shipping segment relies upon major global industries staying buoyant and active – energy, mining, oil and gas, construction, agriculture.
“As long as there is demand from these sectors and majors involved show an appetite for investment and progress, then we will see cargo volumes. In turn, these industries rely upon consumer demand and that depends heavily upon geopolitical stability and economic sustainability. As a carrier, we take all these factors into consideration as well as developing markets and trade lane cargo flows.”
AAL Europe works extensively with renewable energy majors and their projects, he added. “Wind is already a huge driver for the project industry and has in terms of cargo volume shipped at steadily growing levels for many years. At the same time, the wind sector may not deliver hugely exponential growth in terms of cargo volumes over the next five years, as it has already been booming for the last eight or so years anyway. However, what certainly is changing is the size and scope of wind projects worldwide and their components and we expect to see much larger onshore windmills as well as much more substantial offshore projects soon.”
At Gebrüder Weiss, Ravazzolo said the need was likely to be quality rather than quantity when it comes to handling, lifting and transport equipment for the projects to come.
2024 will see the new B-Class heavy-lift vessels come into play.
CREDIT: AAL SHIPPING
CAPACITY MANAGING TO MEET DEMAND
AAL Shipping’s Eike Muentz said there is a lot of multipurpose cargo moving today – both from AAL’s existing customers and also from new customers who have migrated to breakbulk transport, from containerization.
“Demand is being driven by previously depleted stock levels worldwide of both commodities and industrial components, as a result of the Covid-19 pandemic restricting movement for over 18 months. We are also seeing this in the EU project sector (not just EU-based projects, but projects controlled out of Europe), where our shippers are keen to fulfil their own schedule commitments now that they physically can. This is especially true in the wind sector, where national governments have been supporting project owners fiscally and all parties accordingly wish to push forward while investment funds and appetite exists.”
This sudden and sharp demand is still manageable with available MPV tonnage, he said – “despite shippers aggressively bidding in an effort to secure transport solutions and guarantee their cargoes get fixed. This is one of the reasons why we have been advising our customers to simply book earlier and plan with us now for their longer-term needs.”
AAL’s third generation newbuilding program has been made “with solid market fundamentals firmly in mind,” Muentz said. With the six 32,000 dwt Super B-Class heavy-lift vessels expected in the water from 2024, “we are focusing on the same vessel size and long-haul trades that our customers have been trusting us with for many years.”
Across the whole sector, he said, despite very few multipurpose vessels headed to scrapyards, newbuild orders are being driven by solid market dynamics and long-term cargo forecasts by the carriers and operators themselves, rather than any third-party investors applying a ‘short-term gain strategy’.
“This is extremely important for our sector and will negate the possibility of oversupply like after the building boom that took place after 2008 which effectively took down the market for a decade and left many ships unemployed. Today, tonnage supply is manageable, and we are meeting cargo demand.”
Eike Muenz AAL Shipping
“There is already a lot of equipment in the market – after the 2008-09 crisis, the project market was not that strong, so for years there was more equipment than was needed. Right now, it is maybe balanced. The future will be more about very specialized equipment – not the sheer amount. For example, if you build wind turbines in the mountains, you need a special trailer to transport the blades. These have the possibility to lift the blades into a vertical position during transport to move around very tight corners.”
It is quite easy to find a trailer to move a cargo that’s three meters wide, Ravazzolo said. “There are plenty of trailers that can move that. But if the case is six-by-six meters, then there are far fewer trailers. The trend in this industry is going for the biggest modules possible and the demand is going to be for moving these really big units.”
More challenging, he said, is the ‘whole catalogue of rules’ in Germany, as well as slow permitting procedures and a political push to get cargo on to the water.
ESTA’s Klijn explained a bizarre ruling within Germany’s VEMAGS online system for applying for road permits for abnormal and heavy loads. It makes sense that if your permit is for 340 centimeters wide, then if you try to move 345 centimeters wide, you will be stopped and have to apply for a new permit, he said. However, the rules also apply if a load ends up smaller. “If the load is 320 centimeters wide, it will also be stopped because the rules only allow a 15-centimeter difference from the size you say.”
The same applies to weight – if the load is 5 percent lighter than the weight stipulated, the load is stopped and a new permit will have to be applied for, which can take a month, Klijn said.
Ravazzolo pointed out that it might only require a change in packing to make the load “too small.” “You have to be very exact. But sometimes clients are not 100 percent sure – it depends on last-minute packing or modification at the last minute and perhaps they ask for a few centimeters more to be on the safe side, but that is now a problem if it is smaller.”
The trend is for ever-bigger modules and equipment needs to keep up with that.
CREDIT: GEBRÜDER WEISS
BEST PRACTICE GAMECHANGER
ESTA is in favor of having more enforcement and checks on permits and loads, Klijn said, “because it helps the bona fide companies and gets cowboys off the road” – but it has long campaigned for streamlining and alignment of European permitting rules. “Every national government has its own permitting procedures and plethora of rules. Everybody is doing something different.”
He said the sector is now at a pivotal point as a review is under way of the EU directive 96/53 covering European road transport, weights and dimensions.
“I think the EU has listened to us – in the consultation sent out on the revision, it states that one of the objectives is to revise the abnormal transport best practice guide that has been in place since 2008. It is time we got some alignment. If a best practice guide is put into the directive and compulsory to follow, not just left on the shelf, it could be a gamechanger.”
ESTA is also pushing for heavy transport corridors in Europe. “We are advocating dual use of the military corridors created for NATO – if a tank on a trailer can drive through, what about our abnormal loads?” He hopes that within the next two years, such a network could cover the whole of the EU, providing corridors east-west and north-south.
However, in line with the green agenda, Germany is pushing for the relocation of abnormal transport – away from roads and on to water and rail.
“The idea is they are going to make huge environmental gains and use ships and inland waterway or rail for transporting heavy cargo,
NOT TRAINING FOR THE COMPETITION
Recruiting in the breakbulk and project cargo sector in Europe remains a challenge, according to regional experts. “Everybody is chasing people who are old enough to have the knowledge and experience,” Gebrüder Weiss’ Franco Ravazzolo said.
He noted that companies are worried that if they take on young people and train them for one to two years, as soon as they are ready to work and play an active part in the company, the competition puts US$500 more on the table and lures them away. “That’s the reason that stops companies from educating and training young people,” he said. “Of course, we don’t want to prepare people for our competition but if we don’t do this training, someday the pool of experienced people will be completely empty.
“We educate young people – I spend a lot of my time doing that. The pool of available people with knowledge of projects business is drying out, so we have to educate people and take this risk – we need them.”
AAL Shipping has been working in the niche global MPV heavy-lift sector since 1995 and has placed huge emphasis and resources into training and developing its systems and teams – chartering, commercial, engineering and operations, said AAL’s Eike Muentz. “We have been fortunate enough to build the team and systems infrastructure needed to operate seamless global services for our customers.”
proposing that there will be a central organization in Germany that will decide – before the permitting process – whether the load can go by rail or water,” Klijn said.
“This has interesting points to it. At ESTA, we think it will not give you any environmental gain.” Moving a large module by inland waterway, he said, means “you have to load it on a truck first, drive it to the quay, bring in a huge crane, lift it on to the ship, move it by water, then find another crane to lift it off, and bring in more road transport to take it to the site. Ninety-eight percent of the sites are not connected directly to waterways. The cranes would have to be mobilized, transported, demobilized. In 80 percent of the cases, putting something into a ship will give you a negative
RIPPLE EFFECT OF GEOPOLITICS
The war in Ukraine has added another layer of complexity and congestion for shippers. Hapag-Lloyd’s Sarah Schlüter said that the line normally does not move much special cargo for Russia or Ukraine – “for us, it has not been a significant market”, she said.
“However, it is having a ripple effect on the port situation in northern Europe. Where do you put all the stranded containers? The terminals were already so congested and this is causing even more congestion. And that of course has an impact on special cargo.”
Global economic instability is a direct consequence of any geopolitical unrest, such as the war in Ukraine, said AAL Shipping’s Eike Muentz. “Healthy trade flow stems from stability and sustainability and, while there is major conflict in a trading area, the shipping sector is vulnerable to impact. Fortunately, due to AAL’s trade lane focus being away from those regions affected by the Ukraine conflict, our cargo flows have not been negatively impacted. However, a major conflict such as this will leave a residual impact on global shipping, national economies, and the lives of millions of people. Our hope as a company and as part of the global community, watching the horrors of this conflict play out, is for peace and a lasting resolution.”
Aside from this, the disruption of the supply chain on land, a consequence of Covid-19, continues.
More enforcement and checks on permits and loads help the bona fide companies and get ‘cowboys’ off the road.
CREDIT: ALLELYS
“There have been labor shortages and general slowdown of all landside operations, such as truckers, stevedores, and port operations, etc. Hence berthing and port operations have been slow and port congestion a recurring issue around the world.”
Due to these restrictions, AAL has often not been able to send its own cargo superintendents to the ships to supervise cargo operations, he said. “Before the pandemic, ‘remote supervision’ of such operations was rare. Today it is a fact of life and all our teams have been extensively crosstrained to execute work under these forced conditions. Luckily, we have also managed to source capable local contractors to work with us in many key load and discharge regions.”
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The future will be more about very specialized equipment.
CREDIT: AAL SHIPPING impact environmentally – and that’s apart from the economic impact, where it will usually be more expensive.”
PORT AND WATERWAY RESTRICTIONS
Ravazzolo praised the push to switch more cargo from the road to the navigable river network, but agreed there are difficulties that need to be considered. “If you go by river, you have to pay a special truck to reach the next river port, you have to pay for crane handling, river ship, another double craning in port from water to terminal to truck. Green transport costs so much more and companies are not willing to pay that.”
The whole permit situation in Germany is the object of wide discussion all around Europe, he said. “We are all hit by that. There are so many routes through the region where you have to cross Germany.”
On the subject of waterways, he also mentioned problems on the lower
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Danube, where he said many ports are not equipped to handle heavy cargoes. Cranes are missing, quays need reinforcing and road access needs improving. “The lack of investment is historic. So many ports, even if they seem to be in a good location on the map, are not able to handle the cargo. Some are in the middle of a town. Others are well located but focusing on bulks – grain, sand, woodchips – and this type of cargo doesn’t require heavy cranes or strong piers. But when you discharge a 200-tonne generator, you have that weight plus the 80-90 tonne crane and trailer and tractor. A lot of quays would not resist that pressure.”
Many ports have no storage space for large pieces of cargo, he added. “When you come with full river ships with ten big units, you can’t get 10 trucks simultaneously for direct delivery. You need space for at least a couple of days to move the cargo piece by piece to the job site. This is hampering the movement of cargo.”
The challenges in Europe for project cargo movements are wideranging, but not insurmountable. If the work on aligning the bloc’s abnormal transport policies is successful and investment into crumbling infrastructure materializes, Europe has an exciting energy transition just waiting
to be supported by the project cargo industry. BB
Germany is pushing for the relocation of abnormal transport away from roads and on to water and rail.
CREDIT: AAL SHIPPING
Felicity Landon is an award-winning freelance journalist specializing in the ports, shipping, transport and logistics sectors.
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PROFILE
BY FELICITY LANDON
PEOPLE AND PROJECTS
DHL IP’s Ryan Foley Explains Why the Two Are Inextricably Intertwined
Aconversation with Ryan Foley throws up a consistent message – the importance of people.
To put that in context – having the right people in the team will deliver the biggest opportunities, and a restructuring of the DHL Global Forwarding Industrial Projects division is designed to provide a clear line of contact for customers, underpinned by expertise in specific sectors. However, the shortage of experienced and/or available people in the industry represents the biggest challenge.
Earlier this year, Foley, Industrial Projects CEO, announced a series of management changes which he said would “ensure we have the right people focused in the right areas on the right topics.”
“In essence, we have simplified the structure. First, we previously had a commercial team split into two areas covering various sectors and functions. We have now brought all sectors and commercial topics together, with
PROFILE
one point of contact,” Foley told Breakbulk.
As the new vice president, global business development and commercial director Industrial Projects, Andy Tite leads a team of global sector heads covering mining, oil and energy, international energy companies, government and defense and engineering, procurement and construction, as well as a global bid team, Material Management System (MMS360) and marketing.
“Second, for historic reasons we had the Americas split into two. We now have one regional vice president, Industrial Projects Americas – Jake Swanson.
“Customers will see the difference from these changes. If they want to know who to go in the Americas, it is one person. If they want to know who is their commercial lead, they will have one focus point. It should be a simpler access point into DHL and for us it is an easy push down into connecting with our forwarding experts holding extensive project experience in specific areas. We always held that credibility, with our customers knowing they have a real industry expert guiding them – we are simply taking this to the next level.”
DIVERSE PORTFOLIO
DHL Global Forwarding’s Industrial Projects (IP) division covers a broad spectrum of activity, from major capital investment projects with a start and end date through to ongoing logistics contracts involving expediting, global supply chains, line item checking and added services that would not be part of a conventional standalone air or ocean freight offering.
“If it is a bit more challenging, it falls into IP,” Foley said. “If it’s out of gauge, heavy – over 50 tonnes – or part of a large investment, our DHL colleagues have to come to us, although not necessarily just because it’s non-standard container movement. Ocean chartering, breakbulk, turnkey projects or requirements that are nonconventional generally land within the DHL Industrial Projects team.
“We are actively delivering oneoff projects – while also completing and bidding for work with a lot of oilfield service companies, where there is a lot of cargo in the market. In the renewables sector, we have secured spot shipments for small wind farms as well as significant project volumes involving hundreds of turbines and with a strong pipeline for the future that we are actively quoting. So we are talking about a broad portfolio, from individual shipments to multi-vessel charter projects and five to 10-year MRO contract investments.”
However, he said: “Whatever the contractual connections, the execution remains the same. We are still finding the most economic ways to move cargo and continue to push the market to provide the best possible commercial, environmental and operational solutions. Whether one-off or long-term, the work is still the same for our teams at their desk.”
Which brings us to the people. Foley said that the two big challenges he faces are getting experienced people into the organization and upskilling existing teams while coping with the consequences of a virtual world.
“When you look around at the number of projects being operated, there is clearly a skills shortage in our industry,” he said. “When we try to recruit, it is a challenge to secure a list of available and competent people in the market. The pool of people that used to exist is simply not there anymore. Historically, the industry had a lot of contractors who would move from project to project. A lot have left the market and not returned, or are now taking full time roles with another forwarder.”
DHL IP stays close to current bunker prices, daily rates for vessels, capacity coming on main lines and port constraints in the countries it is moving into or out of.
CREDIT: DHL
OVERCOMING DIGITAL OBSTACLES
Then there is the challenge of developing the right skills and experienced people in a virtual world. “I remember at the start of my career sitting next to a colleague and trying to get as much information out of them as possible – watching what they did, going to loadouts with them – and that is how I learned. That first-hand shadowing and learning opportunity is really difficult now, and will be in the future when we are still not in a full return to the office.”
There are benefits from flexible working, but also many negatives in terms of being able to transfer knowledge to people, Foley said. “You can’t do that in a one-hour Teams call once a week or even once a day.
“We are doing our best to give additional support, coaching and training to our people. But we are already in a difficult environment
